The financial sector does not seek special privileges, but rather legal certainty, regulatory consistency, and administrative efficiency, says Tamara Perko, Director of the Croatian Banking Association, for Diplomacy&Commerce. At the same time, she adds, the Croatian banking sector is highly capitalized, liquid, and integrated into the Single European Supervisory Mechanism.
1. According to all projections, we are still reaping the benefits of European integration, which banks have strongly advocated. We expect a slight slowdown in GDP growth, and particularly in employment. What are your projections for growth and development, and what will be the main characteristics of the banking and broader financial market this year? In these unpredictable times, to what extent is it possible to plan and forecast development?
According to analyses prepared by the chief economists of leading banks, real GDP growth is expected to slow from around 3.1% in 2025 to approximately 2.8% in 2026. This represents a normalization following several years of aboveaverage strong growth. In the labor market, a further slight decline in the unemployment rate is anticipated, with projections pointing to around 4.7%, alongside a slowdown in gross wage growth compared to previous years. For the banking sector, this signals the beginning of a period of more stable, yet moderate growth rates. The phase of higher interest income associated with the cycle of rising benchmark rates in the euro area has concluded. In an environment of stabilized interest rates, we expect continued strong lending activity, operational efficiency, and high-quality risk management. Although global risks remain present, membership in the euro area, strong bank capitalization and liquidity, and stable public finances enable reasonable planning and medium-term predictability.
2. How would you assess the current trends in corporate lending (amounts, sectors, purpose, structure, and loan quality) in Croatia, and how do you see the role of banks in the capital market and their support for the development of this segment of the economy?
Corporate lending trends remain very strong. Total corporate loans at the end of 2025 recorded doubledigit growth of around 13%. It is particularly important to highlight that investment loans account for approximately 41% of total net corporate loans, pointing to robust investment activity. Credit growth is balanced and taking place alongside historically low levels of nonperforming loans, at around 3.7%. A breakdown by sector shows that the manufacturing industry is the single largest user of loans, with a share of about 19%, followed by trade and the energy sector. This indicates a broad dispersion of lending activity and solid support for the real economy. As for the capital market, banks play an important advisory and arranging role in equity and bond issuances and actively participate in the development of domestic market, including cooperation with the Zagreb Stock Exchange and support for the implementation of the Capital Market Development Strategy. Bank financing and the capital market complement each other, and strengthening this segment contributes to the overall investment activity of the economy.
3. A stronger development of the capital market is one of the key prerequisites for strengthening investment activity and the competitiveness of the Croatian economy. Growth is no longer driven almost exclusively by public investment, largely financed from EU funds. There is a visible strong revival of private investment. How does HUB view the role of private investment as a potential new engine of economic growth in the country?
According to the latest data and projections, investments will remain an important component of growth in 2026. It is particularly significant that investment growth is no longer predominantly driven by the public sector and EU funds; instead, the private sector is playing an increasingly strong role, with its investments approaching 20% of GDP. We at the Croatian Banking Association believe that private investment is a key prerequisite for long-term productivity growth and competitiveness. Investment loans account for the largest share of corporate lending, demonstrating that banks are following and supporting the investment cycle. Sustainable growth above the EU average can only be built on strengthening private investment, modernizing industry, advancing technological transformation, and increasing export competitiveness.
4. In what ways do banks and funds support the investment momentum in the economy, and are there any specific conditions they require from the legislator or from businesses themselves?
Banks support the investment momentum primarily through investment lending and participation in issuances of bonds and other capital market instruments. Funds provide risk capital, particularly in segments involving innovative and fast-growing companies. What is crucial for maintaining investment dynamics is a stable and predictable regulatory framework. Entrepreneurs are expected to ensure transparent operations, sound governance, and sustainable business plans, which is the foundation of any long-term financing.
5. As of 1 January 2026, banks in Croatia began applying legislative amendments enabling citizens to use an account for regular income with a package of basic banking services free of charge. The legislator’s intention was to allow citizens to dispose of their own cash free of charge. Now that sufficient time has passed, how would you assess the implementation of these amendments, given that there were some minor ambiguities at the beginning?
Banks implemented the legislative amendments within the prescribed deadline, despite the significant operational and financial adjustments required. Initial ambiguities were clarified in cooperation with the competent institutions, and the system is now technically stable in its operations. However, it is important to emphasise that this measure represents a substantial and permanent financial burden for the banking sector due to a structural reduction in fee income, while costs of infrastructure, compliance, digitalisation and regulatory requirements continue to grow. In addition, the Croatian model is exceptionally broad in scope compared to practices in most other EU Member States, both in terms of the range of services included free of charge and the number of citizens eligible to use them. Such a wide application creates a precedent that is not common in comparable banking systems. While citizens are ensured access to a comprehensive set of basic services without fees, it is essential to continuously and carefully assess the long-term economic effects of this measure. Preserving the sustainability of the banking system, investment capacity, and the quality and availability of services must remain a priority, particularly in a small and highly regulated market such as Croatia.
6. How stable, resilient, and immune is the banking sector in Croatia to external developments, and what should never be allowed to happen in order for it to remain stable?
The Croatian banking sector is highly capitalized, liquid, and integrated into the Single European Supervisory Mechanism. Within this framework, it consistently records some of the highest capitalization and liquidity ratios. This provides a strong institutional framework and resilience to external shocks. Stability is grounded in adequate capitalization, sound risk management, and client trust. Croatia gained additional security by joining the euro area through several key factors. First, the largest banks in Croatia are now directly supervised by the European Central Bank under the Single Supervisory Mechanism (SSM), ensuring stricter, independent, and harmonized European oversight. Second, in the event of difficulties in a particular bank’s operations, the Single Resolution Mechanism (SRM), managed by the Single Resolution Board and supported by a common European resolution fund, is activated. This ensures that issues within an individual bank are addressed in an orderly manner and without burdening the taxpayers. Third, Croatia has access to Eurosystem liquidity instruments, further strengthening resilience to external shocks. In other words, by joining the euro area, Croatia did not merely adopt the euro – it placed its banking system under a strong protective European umbrella. In this context, it is crucial in the long term to preserve regulatory stability, the independence of supervisory institutions, and responsible fiscal policy. Under these conditions, the banking system remains a solid pillar of economic development.